Perspectives Blog

U.S. rates — View update

Zach Pandl, Portfolio Manager and Strategist | April 4, 2014

…ed up, and is now four tenths above its level in December. Average hourly earnings growth also slipped to 2.1% year-over-year. However, we would caution against reading too much into a single jobs report. Based on demographic trends, we estimate that “breakeven” payroll growth—the amount needed to lower the unemployment rate—is around 75-100k per month. If job growth continues around 200k per month, it’s very likely the unemployment rate will kee…

Retail sector outlook – It’s a share game

Mari Shor, Senior Equity Analyst | March 17, 2014

expenditures) versus non-durables. Even within non-durables categories, the ongoing spending shift towards accessories and away from apparel can be expected given less favorable weather through summer, less democratic fashion trends in the marketplace and a lack of seasonality in consumers’ wardrobes. With both structural and cyclical headwinds facing many apparel retailers today, we believe that global brand strength and supply chain expertise w…

Hanging in

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | September 20, 2013

Recent retail sales data are well below expectations and probably an indication that consumers have become more cautious about spending. Financial conditions matter greatly, and the recent tightening is likely having some impact on housing activity and consumer attitudes. Spending follows wages and it will be difficult for retail spending to gain much traction with the tie to shallow compensation trends. The best one can say about consumer spe…

What to expect from Janet Yellen’s testimony

Zach Pandl, Portfolio Manager and Strategist | February 10, 2014

…ics community is closing in on a rough consensus. This week’s report from the Congressional Budget Office (CBO) is a typical example. The authors estimate that two thirds of the decline in the participation rate since 2007 is structural, and one third “arose from temporary weakness in employment prospects and wages.” They add that the employment-to-population ratio will peak at just 58.9% in 2017—just one tenth above the level in January—before t…

When the QE tide recedes, focus on what is revealed

Robert McConnaughey, Director of Global Research | January 6, 2014

…has reasserted itself on the global stage with the bold economic policies that have become known as “Abenomics.” Abenomics has been described as having “three arrows”: 1) aggressive monetary easing, 2) fiscal stimulus and 3) structural reforms. Japanese markets responded extremely favorably to the competitive boost the economy has received from heavy doses of the first arrow and some small measure of the second arrow in 2013. However, the market…

Gaps, not growth

Zach Pandl, Portfolio Manager and Strategist | February 25, 2014

…l: Output Gap = β * (GDP growth – Potential GDP growth) where beta is the Okun’s Law coefficient. The relationship is also commonly written in terms of the unemployment gap—the difference between the unemployment rate and its structural rate. Okun’s Law is at the center of today’s biggest policy debate. Since the recovery began in the second half of 2009, GDP growth has increased at an average annualized rate of just 2.4%. Before and during the r…

Slow growth: Why is it here and will it stay?

February 24, 2014

…quality in the United States that not only contributed to the global financial crisis, but also help define the options for policymakers on the monetary and fiscal fronts. Government policies can both help and aggravate these trends and need to be delicately balanced from a risk/reward perspective. We will then take a global perspective, examining the effects of globalization on domestic inflation and on U.S. and global industries and earnings. F…